Supreme Court sets aside provision of Tribunal Reforms Ordinance 2021 fixing tenure of members of tribunal at 4 years

The Supreme Court on Wednesday struck down the newly inserted Section 184 of the Finance Act, 2017 as amended by the Tribunal Reforms (Rationalisation and Conditions of Service) Ordinance, 2021 (ordinance) to the extent it fixed the tenure of members and chairperson of tribunals at 4 years. .The judgment was delivered by a three-judge Bench of Justices L Nageswara Rao, S Ravindra Bhat and Hemant Gupta on a plea by Madras Bar Association challenging Sections 12 and 13 of the ordinance by which Sections 184 and 186(2) of the Finance Act, 2017 was amended.While Justice Rao authored the majority opinion, Justice Bhat delivered a separate concurring opinion..The top court ruled that Section 184(11) of the Finance Act which prescribes tenure of four years is contrary to the principles of separation of powers, independence of judiciary, rule of law and Article 14 of the Constitution of India."Consequently, the declaration of this Court in para 53(iv) of (the judgment in) Madras Bar Association-III shall prevail and the term of Chairperson of a Tribunal shall be five years or till she or he attains the age of 70 years, whichever is earlier and the term of Member of a Tribunal shall be five years or till she or he attains the age of 67 years, whichever is earlier," the concurring judgment of Justice Bhat said. The Court also held that the first proviso and the second proviso, read with the third proviso, to Section 184 in respect of fixing 50 years as minimum age for appointment and payment of HRA are unconstitutional for violating the Court's 2020 judgment in Madras Bar Association v. Union of India. "It is plain and simple, discrimination based on age. The criterion (of minimum 50 years of age) is virtually “picked out from a hat” and wholly arbitrary," Justice Bhat said. The Court further held that Section 184(7) relating to recommendation of two names for each post by the Search-cum-Selection Committee (SCSC) and further, requiring the decision to be taken by the Government preferably within three months is violative of the Constitution..However, the Court upheld the proviso to Section 184(11), but the appointments made to the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) pursuant to the interim orders passed by the top court shall be governed by the relevant statute and the rules framed under the same that existed prior to May 26, 2017..Justice Hemant Gupta, the third judge on the Bench, delivered a partly dissenting judgment. He struck down Sections 184(11) 184(7) but upheld the first, second and third proviso to Section 184(1). The proviso to Section 184(11) was also upheld by him. .Madras Bar Association moves Supreme Court challenging provisions of Tribunals Reforms Ordinance 2021.The petitioner association had approached the Supreme Court after the Central government promulgated the ordinance in April 2021 amending nine central legislations and abolishing four tribunals. The ordinance was introduced after the 2020 judgment of the Supreme Court in Madras Bar Association v. Union of India in which the top court had ordered some modifications to the Tribunal, Appellate Tribunal and other Authorities (Qualifications, Experience and other Conditions of Service of Members) Rules, 2020 (2020 Rules). The Court in that judgment had ordered that the 2020 Rules shall apply prospectively from February 12, 2020 and issued a slew of directions to govern tribunals and the appointments and service conditions of tribunal members.As per the same, lawyers with legal practice of 10 years will be eligible for appointment as judicial members of tribunals.After the 2020 judgment of the Supreme Court in Madras Bar Association, the ordinance was promulgated in April 2021.With respect to Finance Act, 2017, Section 12 of the ordinance substituted Section 184, Section 13 of the ordinance inserted Section 186(2) and the Eighth Schedule was amended so as to omit four tribunals and to substitute the item relating to the National Consumer Disputes Redressal Commission..In its plea before the Supreme Court, the Association submitted that the challenged provisions are in "contravention of the principles of separation of powers, independence of the judiciary (both being part of the basic structure of our Constitution), and are against efficient and effective administration of justice"..The plea stated that Section 184 of the Finance Act, 2017 contravenes the previous decision of the Supreme Court in Union of India v R. Gandhi [(2010) 11 SCC 1], Madras Bar Association v Union of India, [(2014) 10 SCC 1], Rojer Mathew v South Indian Bank Ltd, [(2020) 6 SCC 1] and Madras Bar Association v Union of India (2020)..The plea further said that first proviso to Section 184(1) provides for a minimum age limit of 50 years and that it is "arbitrary, unconstitutional and against the directions of Supreme Court in R Gandhi, Rojer Mathew and, in particular, Madras Bar Association case."Section 184(1), second proviso states that all allowances and benefits shall be to the extent as are admissible to a Central Government officer holding the post carrying the same pay. It is submitted that this provision is contrary to the decision of this Hon’ble Court in Madras Bar Assn. (2020) [Para 53(xiv)], and would also have the effect of denying the benefits under the decision to future members," the plea said..[Tribunal Ordinance challenge] Supreme Court can pass any number of orders but Parliament can enact laws overturning it: Centre to Supreme Court.One of the moot point of the hearing was whether the retrospective effect given to Section 184(11) of Finance Act would override the judgments of the Supreme Court..The Central government had maintained that the Parliament is empowered to enact laws overturning Supreme Court judgments..This submission was made by Attorney General KK Venugopal after Justice Hemant Gupta had asked Central government "if you are enacting legislation then are you not nullifying the judgment of this court?""I am sorry to say but Your Lordships can pass any number of orders but the parliament can say it is not in interest of the country and enact a law," Venugopal had responded. .The Court in its judgment on Wednesday held that the permissibility of legislative override in this country should be in accordance with the principles laid down by the Supreme Court which are as follows:a) The effect of the judgments of the Court can benullified by a legislative act removing the basis of the judgment. Such law can be retrospective. Retrospective amendment should be reasonable and not arbitrary and must not be violative of the fundamental rights guaranteed under the Constitution;b) The defect pointed out should have been cured such that the basis of the judgment pointing out the defect is removed;c) Nullification of mandamus by an enactment would be impermissible legislative exercise;d) Transgression of constitutional limitations and intrusion into the judicial power by the legislature is violative of the principle of separation of powers, the rule of law and of Article 14 of the Constitution of India..Justice Bhat in his concurring opinion stated that it is too late now to contend that independence of judiciary and separation of powers are vague concepts based on which Parliamentary reenactment cannot be invalidated.Constitution, he observed, does not and cannot be read so as to provide two kinds of justice - one through courts, and one through other bodies."The quality and efficacy of these justice delivery mechanisms have to be the same, i.e., the same as that provided by courts, as increasingly, tribunals adjudicate disputes not only between state agencies and citizens, but also between citizens and citizens as well as citizens and powerful corporate entities," he said. .[Read Judgment]